Where would you like to sign in?

ZG Ventures, LLC Acquires Securities of ePals Corporation

WASHINGTON, DISTRICT OF COLUMBIA--(Marketwired - May 21, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA OR THROUGH U.S. NEWSWIRE SERVICES

ZG Ventures, LLC ("ZG"), a venture capital firm located at 400 7th Street N.W., Washington, DC, acquired direct ownership of an aggregate of 21,784,000 restricted voting common shares ("Restricted Voting Common Shares") of ePals Corporation ("ePals"). The Restricted Voting Common Shares are convertible into voting common shares of ePals ("Voting Common Shares" and together with the Restricted Voting Common Shares, the "Common Shares") on a one-for-one basis.

ZG now directly holds 106,979,106 Restricted Voting Common Shares representing approximately 39.6% of the outstanding Restricted Voting Common Shares (approximately 27.4% of the outstanding Common Shares). In addition, ZG holds: (i) 412,918 warrants, each of which may be exercised for either one Voting Common Share or one Restricted Voting Common Share (as determined by the board of directors of ePals) at a price of US$0.495 per share as to 343,434 warrants and at a price of US$4.87 per share as to 69,484 warrants; and (ii) convertible debentures in the aggregate principal amount of C$2,250,000, which debentures are convertible into Voting Common Shares at a price of C$0.40 per share.

Shaman III, LLC ("Shaman"), a company which is 50% indirectly owned by ZG, directly holds 4,580,259 Voting Common Shares and 8,698,834 Restricted Voting Common Shares representing approximately 3.8% of the outstanding Voting Common Shares and approximately 3.2% of the outstanding Restricted Voting Common Shares, respectively (approximately 3.4% of the outstanding Common Shares). In addition, Shaman holds: (i) 931,310 warrants, each of which may be exercised for either one Voting Common Share or one Restricted Voting Common Share (as determined by the board of directors of ePals) at a price of US$0.495 per share; and (ii) 1,720,133 warrants, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share.

ZG II, LLC ("ZG II"), an affiliate of ZG, directly holds 2,222,977 Voting Common Shares and 6,668,937 Restricted Voting Common Shares representing approximately 1.8% of the outstanding Voting Common Shares and approximately 2.5% of the outstanding Restricted Voting Common Shares, respectively (approximately 2.3% of the outstanding Common Shares). Zolt-Gilburne 2012 Family Trust ("ZG Trust"), an affiliate of ZG, directly holds 37,433,789 Restricted Voting Common Shares representing approximately 13.9% of the outstanding Restricted Voting Common Shares (approximately 9.6% of the outstanding Common Shares). In addition, ZG Trust holds: (i) convertible debentures in the aggregate principal amount of C$1,500,000, which debentures are convertible into Voting Common Shares at a price of C$0.40 per share; and (ii) 12,477,930 warrants, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share.

If all of the warrants held by ZG (directly and through Shaman and ZG Trust) were exercised for Restricted Voting Common Shares, ZG would hold or control a total of 173,978,728 Restricted Voting Common Shares, representing approximately 61.2% of the then outstanding Restricted Voting Common Shares.

If all of the Restricted Voting Common Shares, convertible debentures and warrants held by ZG, Shaman, ZG II and ZG Trust described above were converted into or exercised for Voting Common Shares, ZG and its affiliates would hold or control a total of 191,501,192 Voting Common Shares representing approximately 61.3% of the then outstanding Voting Common Shares (approximately 46.9% of the then outstanding Common Shares), calculated on a partially diluted basis and assuming no other increases in the number of issued and outstanding Common Shares.

The Restricted Voting Common Shares acquired by ZG were issued at a deemed price of C$0.075 per share as consideration for the assignment by ZG to ePals of the outstanding debt owed to ZG by ePals, Inc., a wholly-owned subsidiary of ePals, in the aggregate amount of US$1,500,000 (CDN$1,633,800).

ZG's holding of securities of ePals is for investment purposes. ZG may from time to time acquire ownership of, or control over, additional securities of ePals, dispose of some or all of the existing or additional securities of ePals or may continue to hold the current position.